July 30, 2018
Taiyo Nippon Sanso Corporation

Consolidated Financial Performancefor the First Quarter of Fiscal Year Ending March 31, 2019
(Based on IFRS)(Amounts less than ¥1 million are omitted)

1. Financial results for the first quarter of FYE2019 (April 1, 2018 – June 30, 2018)(1) Operating results(Percentages indicate year-on-year change)

Core operating
incomeRevenue(¥ million)

Operatingincome

Net income

Net income
attributable toowners of theparent

Total
comprehensive
income%(¥ million)%(¥ million)%(¥ million)%(¥ million)%(¥ million)%

First quarterof158,662
FYE2019

5.2

13,934(0.7)

14,778

3.1

10,159

28.6

9,684

27.2

16,89093.6

First quarterof150,861
FYE2018

13.1

14,03715.8

14,337

16.3

7,898

14.6

7,611

17.4

8,725

―(Reference) Income before income taxes
First quarter of FYE2019: ¥14,223 million [4.4% ]First quarter of FYE2018: ¥13,624 million [16.4% ]Core operating income is calculated as operating income excluding certain gains and expenses
attributable to non-recurring factors (non-recurring items).
Basic earnings
per share (yen)First quarter ofFYE2019
First quarter ofFYE2018

Diluted net income
per share (yen)

22.38

―

17.59

―(2) Financial position
Total assets(¥ million)

Total equity(¥ million)

Equity attributableto owners of theparent (¥ million)

Equity attributableto owners of theparent ratio (%)

First quarter of FYE2019(June 30, 2018)942,953

423,374

397,766

42.2

FYE2018 (March 31, 2018)

931,047

412,072

386,457

41.5

1

2.

Dividends
Annual Dividend
End of 1quarterstYen

FYE2018
FYE2019
FYE2019 (est.)―ndEnd of 2quarterEnd of 3rdquarterTermend

Total

Yen

Yen

Yen

Yen

11.00

―

12.00

23.00

12.00

―

12.00

24.00

―

Note: No revisions have been made to recently announced forecasts.
3.

Forecasts for business operations for FYE2019 full term (April 1, 2018 – March 31, 2019)(Percentages indicate year-on-year change)

Core operating
incomeRevenue(¥ million)%(¥ million)%

Operatingincome(¥ million)

Net income%

First-half
328,000 7.3
30,5004.1
31,200
5.4
Full term
670,000 3.7
64,0006.6
64,5007.7
Note: No revisions have been made to recently announced forecasts.
(Reference) Income before income taxes
First half of FYE2019: ¥29,000 million [4.8%]
FYE2019 full term: ¥60,000 million [7.3%](¥ million)%

19,00042,0003.5（17.2）

Net income
Basic earnings
attributable toper shareowners of the parent(¥ million)

18,00040,000%(Yen)

1.9(18.2)

4.

Explanation concerning the appropriate use of forecasts for business operations and other notable matters
This report contains business forecasts and other forward-looking statements that are based on information
currently available to the Company and certain assumptions judged to be reasonable by management. The
Company gives no assurances that business forecasts will be attained. Moreover, actual results may differ
materially from business forecasts due to various factors.

5.

General information relating to the first quarter results
In the first quarter of the fiscal year under review (from April 1, 2018 to June 30, 2018), in the TNSC Group’sbusiness environment, the production activities in both domestic and overseas manufacturing industries weregenerally good, and shipments of air separation gases (oxygen, nitrogen, and argon) were solid. In the electronicsrelated field, sales of smartphones worldwide displayed a tendency to slow down, but overall the demand forsemiconductors continued to expand.
Against this backdrop, the Taiyo Nippon Sanso Group (TNSC Group) achieved the following results for thefirst quarter of the fiscal year under review. Revenue on a consolidated basis increased 5.2% year on year to¥158,662 million, core operating income decreased 0.7% to ¥13,934 million, operating income increased 3.1% to¥14,778 million, and net income attributable to owners of the parent increased by 27.2% to ¥9,684 million.
Core operating income is calculated as operating income excluding certain gains and expenses attributable tonon-recurring factors (non-recurring items).
A breakdown of business performance by reportable segment is as follows.
Segment income represents core operating income.
From the first quarter of the fiscal year under review, the TNSC Group changed its reportable segments.
Therefore, to facilitate the year-on-year comparisons shown below, the figures for the first quarter of the preceding
fiscal year have been reclassified based on the changes to the reportable segments.
Gas Business in Japan
In the industrial gas-related business, revenue from air separation gases, a core product, performed solidly for use
primarily in the key industries of steel and chemicals. In addition, revenue from on-site business increased since a
new on-site plant started operations in October 2017. Meanwhile, revenue from equipment and plants decreased.
In the electronics-related field, revenue from electronic materials gases slightly decreased.
In the energy-related field, revenue from liquid petroleum gas (LPG) increased year on year due to a higher
sales price following an increase in the import price.
As a result, in the Gas Business in Japan, revenue increased 5.1% year on year to ¥82,697 million, while241.5992.43

segment income decreased 17.7% to ¥6,137 million.
Gas Business in the United States
In the industrial gas-related business, revenue from bulk gas and hard goods increased following a firm
performance in the manufacturing sector. Shipments of carbon dioxide gas also increased due to completion of a
new gas production facility in January 2018.
In the electronics-related field, revenue from electronic materials gases declined year on year.
As a result, in the Gas Business in the United States, revenue increased 6.5% year on year to ¥44,512 million,and segment income decreased 0.2% to ¥3,118 million.
Gas Business in Asia & Oceania
In the industrial gas-related field, in China sales increased due to favorable shipments of air separation gases. In
Singapore and Malaysia, revenue from air separation gases and hard goods increased due to the recovery of theenergy sector. In Australia, shipments of LPG were favorable and sales increased.
In the electronics-related field, revenue from electronics-related equipment and installation decreased inTaiwan.
As a result, in the Gas Business in Asia & Oceania, revenue increased 5.3% year on year to ¥25,121 million,
and segment income rose 64.1 % to ¥3,317 million.
Thermos BusinessIn the Thermos Business, revenue decreased year on year due to decreased sales of vacuum insulated portablemugs, a core product, in Japan.
As a result, in Thermos Business, revenue decreased 3.2% year on year to ¥6,332 million, while segment
income decreased 15.9% to ¥1,708 million.
6.

Change in accounting policy
From the first quarter of the fiscal year under review, the TNSC Group applies IFRS 15, “Revenue from contractswith customers” (issued in May 2014) and “Clarifications to IFRS 15” (issued in April 2016) (hereinaftercollectively referred to as “IFRS 15”).
In accordance with the adoption of IFRS 15, the TNSC Group recognizes revenue, based on the following 5step model, in an amount that reflects the consideration to which the Group expects to be entitled in exchange forgoods or services transferred to customers.
Step 1: Identify the contract with the customer
Step 2: Identify performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the performance obligations are satisfied
The TNSC Group conducts gas businesses in Japan and overseas, mainly for customers in the steel, chemical,and electronics industries, and has built production and sales structures for its main products in Japan, the UnitedStates, and Asia & Oceania. In addition, the TNSC Group conducts the manufacture and sales business ofhousewares such as stainless steel vacuum bottles.
Regarding product sales in these businesses, because a customer acquires control over a product at the time theproduct is delivered, TNSC judges that its business obligations have been satisfied and recognizes its revenue, atthe time the product is delivered.
Revenue is measured from the price promised in the contract with the customer, after deducting such amounts
as discounts, rebates and returns.
The amount of the price in the sales contract of a product is generally collected within one year from the time
when control over the product is transferred to a customer, and does not include the important element of theinterest.
The impact of the adoption of IFRS 15 on the condensed consolidated financial statements of the TNSC Groupwas negligible.
When IFRS 15 was adopted, a method, which was recognized as a transitional measure, was used to recognize
the cumulative effect of adopting this standard on the date of starting the adoption. However, the cumulative
financial impact on the date of starting the adoption of this standard was negligible.

37.

Segment information
The TNSC Group conducts gas businesses in Japan and overseas, mainly for customers in the steel, chemical, andelectronics industries, and has built production and sales structures for its main products in Japan, the United States,and Asia & Oceania. In addition, the TNSC Group conducts the manufacture and sales business of housewares
such as stainless steel vacuum bottles. Therefore, the Company has established the following four reportablesegments: Gas Business in Japan, Gas Business in the United States, Gas Business in Asia & Oceania, and ThermosBusiness.
Changes to reportable segments
To display the results of the Thermos Business more clearly, from the first quarter of the fiscal year under review
the TNSC Group has changed the four existing reportable segments of Gas Business in Japan, Gas Business in the
United States, Gas Business in Asia & Oceania, and Thermos & Other Businesses, to the four segments of Gas
Business in Japan, Gas Business in the United States, Gas Business in Asia & Oceania, and Thermos Business. To
facilitate the year-on-year comparisons, the figures for the first quarter of the preceding fiscal year have been
reclassified based on the changes to the reportable segments.
The principal products and services included in the four segments are shown in the table below.
Business segment
Gas Business in Japan
Gas Business in theUnited States
Gas Business in Asia &Oceania
Thermos Business

Main products and services
Oxygen, nitrogen, argon, carbon dioxide, helium, hydrogen, acetylene, gas- related
equipment, specialty gases (electronic materials gases, pure gases, etc.), electronicsrelated equipment and installation, semiconductor manufacturing equipment, cutting
and welding equipment, welding materials, plants and machinery, liquid petroleumgas (LPG) and related equipment, medical-use gases (oxygen, nitrous oxide, etc.),
medical equipment, stable isotopes
Housewares

The accounting methods adopted for the reported operating segments are the same as the methods adopted toprepare the consolidated financial statements for the preceding fiscal year. Revenue from inter-segment
transactions and transfers is based primarily on prevailing market prices.

(1) Figures of revenue and income (loss) by reportable segment
First Quarter, FYE2018 (April 1, 2017 – June 30, 2017)(¥ million)
Gas
Businessin JapanGas Business Gas Businessin the United in Asia &States
Oceania

Thermos
Business

Total

Amounts on theAdjustments Consolidated(Note 1) Statements ofIncome

Revenue(1) Revenue toexternal customers(2) Revenue frominter-segment
transactions andtransfers
Total
Segment income(Note 2)

78,684

41,77623,857

6,543

150,861―

150,861

2,656

2,207

416

55,286―

81,341

43,98324,273

6,549

156,148(5,286)

7,459

3,124

2,020

2,032

14,638(5,286)150,861(600)

14,037

Notes:
1. The ¥600 million negative adjustment for segment income is comprised of ¥269 million of intersegment
eliminations and companywide expenses of ¥331 million that were not allocated to any particular reportablesegment. These companywide expenses related principally to basic research expenses that were not allocatedto a particular reportable segment.
2. Segment income represents core operating income, which is calculated as operating income excluding certain
gains or losses attributable to non-recurring factors (non-recurring items).

4First Quarter, FYE2019 (April 1, 2018 – June 30, 2018)(¥ million)
GasBusinessin Japan

Gas Business Gas Businessin the United in Asia &States
Oceania

Thermos
Business

TotalAmounts on theAdjustments Consolidated(Note 1) Statements ofIncome

Revenue(1) Revenue toexternal customers(2) Revenue frominter-segment
transactions andtransfers
TotalSegment income(Note 2)

82,69744,51225,121

6,332

158,662－

158,662

1,758

3,024

901

5

5,691

(5,691)－

84,45547,53626,023

6,338

164,354(5,691)

158,662

6,137

3,118

3,317

1,708

14,282(347)

13,934

Notes:
1. The ¥347 million negative adjustment for segment income is comprised of ¥27 million of intersegment
eliminations and companywide expenses of ¥374 million that were not allocated to any particular reportablesegment. These companywide expenses related principally to basic research expenses that were not allocatedto a particular reportable segment.
2. Segment income represents core operating income, which is calculated as operating income excluding certain
gains or losses attributable to non-recurring factors (non-recurring items).
(2) Reconciliation of segment income with income before income taxes(¥ million)
First quarter of FYE2018(April 1, 2017 to June 30, 2017)
Segment income

14,037First quarter of FYE2019(April 1, 2018 to June 30, 2018)13,934Gain on sales of noncurrent assets

299

947

Other－(104)

Operating income

14,337

14,778Financial revenue

642

747

Financial expenses(1,355)(1,301)

Income before income taxes

13,624

5

14,223

8.

Subsequent Events
Acquisition (100% Ownership) of the Corporations Running the European Businesses of the US Company Praxair,
Inc.
Taiyo Nippon Sanso Corporation executed the share purchase agreement with Praxair, Inc. (“Praxair”) pursuant towhich the Company will acquire the shares of the corporations running the European businesses of Praxair on July
5, 2018 (Japan time).
On June 1, 2017, Praxair reached an agreement with German company Linde Aktiengesellshaft (“Linde AG”)
to merge by establishing a newly formed Irish holding company, Linde Public Limited Company. The competition
law authorities in the relevant countries are reviewing that merger, and the European Commission is requesting thatPraxair sell a part of its European businesses to a third party. We have now executed the share purchase agreement
in order to acquire the shares of the corporations running such businesses via a European subsidiary to be newly
established. The execution of the above-mentioned transaction is conditioned on the ultimate Linde-Praxair being
consummated which requires Praxair and Linde AG obtaining approval from the competition authorities for themerger in the relevant countries and our company obtaining approval from the European Commission and the otherrelevant competition authorities for executing the acquisition.

(1) Purpose of acquisition
We are aiming at “one trillion yen in sales, a 10% operating margin ratio, 10% or more ROCE, 50% or more
overseas sales” as our long-term management vision in order to make ourselves more globally competitive and to
firmly establish our place in the industry reorganization environment. We regard this acquisition as a means tomake a large advancement toward realizing such vision and an attractive opportunity with strategic significance atthe same time.
The industrial gas market in Europe is the second largest behind the North American market, and its competition
environment is stable. This acquisition will accelerate our global expansion by obtaining businesses with a certain
share in the market in which we have not had previous participation. Further, we will be able to acquire profitablebusinesses with a certain scale and network (e.g., manufacturing base) as well as talented personnel including thecurrent top management and business platform. Based on such business foundation, we are planning to provide ourproducts, such as environmental responsive products, and to reinforce our groupwide functions, such asenhancement of our marketing to global firms.
(2) Summary of target businesses
The industrial gas business of Praxair’s European territories in Germany, Spain, Portugal, Italy, Norway, Denmark,Sweden, the Netherlands and Belgium, the carbon dioxide gas business in the United Kingdom, Ireland, theNetherlands and France and the helium-related businesses.
(3) Date of share acquisition
November 2018 (planned)(4) Equity interest ratio with voting rights to be acquired
100.0%(5) Consideration
We plan to pay 5,000 million euros (approx. 643.8 billion yen) as the acquisition price.
Notes:
1. Acquisition price will be adjusted by cash and debt balance and working capital variance etc. at the closing of thetransaction.
2. The conversion to Japanese yen uses a rate of 1 euro = 128.76 yen (as of July 4).

6